Customer research: know your customer

With research you can avoid, for example, starting a young people's nightclub in a region where mainly elderly people live. Or giving your customers discounts when what they want is better quality products. 

What is a target group?

A target group is a group of people you want to reach with your product or service. With a target group analysis, also called target group research or customer research, you determine what common characteristics your ideal customer has.  Such as age, interests, and needs.

Selecting a target group

By focusing on a clear target group, you can communicate more effectively and respond better to their needs. You can more easily convince them to become your customer. Suppose you want to become a coach. Then it is not difficult to realise that you have a completely different target group as a tennis coach than as a burn-out coach, or career coach. But even within that, you can make your target group more precise. As a career coach, do you target young female graduates or HR managers of large companies? And as a tennis coach, do you want to coach children or seniors?

If you clearly define your target group, you will also know better which themes and topics to write about on your website, and this means you will be more findable by search engines. You are also more likely to gain valuable followers on social media if you tailor your content to the right interests. For example, topics such as: preventing burnout in the workplace or 10 creative job application tips for a successful start to your career. Or, if you own a plant shop for example, 7 tips to repot your plants. Elderly people may still read door-to-door leaflets so you can still distribute your offer as a tennis coach via flyers around your tennis club. But if you focus on children, you will mainly look at which marketing channels their parents are active on.

Target group research examples

How you go about researching your target group or customer depends on what you want to achieve. For example:

• You are just starting out and want to know who your ideal customers are and how to reach them.
• You want to know whether your current customers are satisfied with your service or product.
• You want to know why existing customers do not come back (often).
• You want to adjust or expand your product range.

Step-by-step guide to customer research

Market research expert Hans De Jong explains how you can get to know your customer in these 4 steps.  

1. Define the goals of your research

Describe what you want to achieve with your audience research. “Your objectives should be in line with your business goals so that your research contributes to achieving them,” De Jong points out. “So, grab your mission, vision and marketing plan.’

An objective for customer research might be: I want 4 new customers from the region in the next quarter. Then, for example, make a list of 10 companies in the area to whom your product or service might be of interest. Then approach these companies with questions about their buying behaviour and needs around your product or service.

Another goal could be: ‘I want to survey the customer satisfaction of current customers in North Holland within a period of 3 months’. With the results of that survey, you find out how to improve your service. Suppose the survey shows that your customers find it difficult to reach you and this makes them more likely to chat with a competitor. Then you can start offering a chat option yourself.

2. Make a plan of action

Make your research as precise as possible. “The more precise your research, the more concrete the results," explains De Jong. Apply focus by drawing up an action plan. In it, you include the results of step 1 and supplement them with the following points:

Target group description

Describe your target audience. “Are you targeting your existing target group, part of it, or just a new target group? Note information you already have that is relevant to your main question, such as age, place of residence, income, or key behavioural elements. You may also want to check an expectation your target group may have.” 

Central question

Formulate your central question. "The question could be ‘Which marketing channels are effective for my target group?’" says De Jong, "Or ‘How do I reach new customers in North Holland?’ Then define what issues you need to research to answer your main question. These are your sub-questions or subtopics."

Research method

Choose your research method. De Jong:“You can start with this in a low-threshold way. You do not have to incur costs or hire a research agency right away I recommend starting by researching existing customers and looking at what data you already have.”

3. Research existing customer information

Do you already have customers? Then use the valuable information you already have.  Sales data, average purchase amount, most common postcodes, and the rate of repeat purchases all offer you insights into your customers and their behaviour. Store the information you gather in, for example, a CRM system. Questions to research include:

Who is buying your product or service?

Are these mainly businesses or consumers? What demographics can you uncover, such as place of residence? For this, look at your invoices or CRM system, for example. Be sure you comply with GDPR, the EU privacy law. You can only store and use data that is necessary for your business operations. You need to know a customer's place of residence to ship orders.

How often do these customers buy from your company?

Do you deal with a customer group that buys your products, say, once every 5 years (like a furniture shop). Or a customer group that shops every day (like a supermarket)? Check your invoices for this or your loyalty programme, for example.

Why do your customers buy your product or service?

Are they buying something they need, such as food or business supplies? Or is your product or service mainly a luxury or leisure item, such as jewellery or a holiday? During the sales process, ask about the reason for purchase. In the case of an online order or service request, you can ask for the reason for purchase in the purchase confirmation.

Survey questions for customers

You can also ask your customers questions in person or send a survey. De Jong suggests a few examples:

• Ask 10 of your customers about their wants or needs with your product or service.
• Conduct a customer satisfaction survey. Use the feedback to establish a base line. Then repeat the survey after a certain period of time to determine whether customer satisfaction has increased.
• Invite customers to your shop or showroom and observe their behaviour. Or do quantitative research on which product features actually encourage purchases, and which do not.
• For product launches, use a test panel or an experiment where you analyse/research customer reaction and opinion.
   

4. Search externally for customer information

There is a lot of data online and offline that you can use for your customer research. “This data, such as demographics, market figures, or public surveys, provides additional insight that you can use for your research,” says De Jong. He gives 3 examples:

• If you are going to develop a product for factories, do research on these factories. Check online where factories are located and which ones are within your region.
• If you want to open a local bakery, focus mainly on the area around your shop. What is the average disposable income in this area? Are there a lot of passers-by? When do they do their shopping? For this information, you can contact your municipality or a business association in your shopping area. For example, look at a ‘shopping flow survey’  (in Dutch) for your city or town. In it you will find consumers' online and offline buying behaviour, including their experience.
• Do you have a travel agency for extreme adventure travel? Then you have a clear target group, and you can look for data in a targeted way. What spending pattern does your target group have and how often do they go on holiday? You can find this information through official bodies such as Statistics Netherlands (CBS) and the The Netherlands Institute for Social Research (SCP).

Difference between market research and target group research

A customer survey is part of your market research. First, you research the market and look at statistics such as the number of companies in your industry or the number of inhabitants in the region where you operate. For example, are you going to open an upscale sandwich shop? Then first research how many similar catering businesses are already in the region. You can do this with the KVK Company counter. And also look at characteristics of nearby residents. If the average income is low, you may want to look elsewhere for a location for your luxury sandwich shop.

Need help? Call in an expert

Doing customer research becomes easier the more experience and knowledge you have. Do you not have the time to do this? Or would you rather spend your time on other work? “A research agency or market expert can help you get started quickly and thoroughly,” says De Jong. “The big advantage of this is that you can be sure of the quality, and that a researcher goes into the research with no assumptions or personal preferences. You can quickly recoup the research costs. Say your research costs €2,000, but it ensures that you approach your customer in a more targeted way. As a result, you bring in 20 extra customers every month who spend an average of €50. Then the payback period is only two months. And you can carry on working in the meantime.”